Uber buys acquired food delivery start-up Postmates for a whopping $2.65 billion after the ride-sharing company struggled to be relevant during the pandemic, as reported by CEO Bastian Lehmann.
Key Takes:
- Uber has acquired food delivery start-up Postmates for $2.65 billion
- Postmates will continue to operate independently under its own name, separate from Uber’s food delivery platform, Uber Eats
- Postmates was performing well in the Southwest region of the United States in the first quarter of 2020, with revenue of $107 million and 115,000 merchants using the platform
- The head of food delivery at Uber will continue to lead the business, while the CEO of Postmates will remain during the regulatory review
- Uber may integrate some of its Uber Eats features into Postmates, such as a monthly subscription with no fees for orders over $12
According to a New York Times reporter Mike Isaac, and confirmed by Postmates CEO Bastian Lehmann, Postmates has been acquired by Uber for $2.65 billion amid the rising demand for food delivery (Uber Postmates Postmates CEO Bastian Lehmannisaac).
Uber, originally a cab company, is also in the food delivery business – Uber Eats. As the giant saw Postmates giving them tough competition, Uber saw an opportunity and pulled the if-you-can-defeat-them-buy-them trick and bought Postmates for a good sum.
One would assume that Uber will integrate Postmates with its own food-delivery platform Uber Eats, but no. Postmates, even after being acquired by Uber, will work independently under its own name. It is noted that Uber Eats was performing better than Uber (ride-sharing) during the pandemic. [Uber Postmates Postmates Ceo Bastian LehmannIsaac]
Uber x Postmates
During the pandemic, the two companies (Uber Eats and Postmates) were showing great numbers but as the competition grew, both had to compete by keeping the fees as low as possible. Uber, the bigger one, decide to end the competition, and bought the food-delivery start-up Postmates for $2.65 billion .
As reported by Mike Isaac from the New York Times, Postmates CEO Bastian Lehmann was in talks with other competitors, namely DoorDash and Grubhub. On the other hand, Uber was trying to buy Grubhub but the company was sold for $7.3 billion to a European food delivery unicorn, Just Eat Takeaway.
According to stats shared by Edison Trends, more than 37 percent of food-delivery sales will now be shared by Uber (Eats) and Postmates in the United States. Grubhub would now share 17 percent of the total. DoorDash is on another game; the company takes 45% of the total food-delivery sales share across the United States. And these stats are just for credit card spending.
“You can expect to see some of these tactics at Uber Eats…We think it’s just a wonderful combination,” stated Dara Khorowshahi, Uber CEO. According to the CEO, Uber is thinking of integrating some Uber Eats features into Postmates as well, such as the monthly subscription for $9.99 that features no fees for orders of more than 12 bucks.
About Postmates
Postmates is a food delivery company that was one of the pioneers in using gig workers (independent contractors) for delivery services. After its acquisition by Uber, the head of food delivery at Uber will continue to lead the business and the CEO of Postmates will remain during the regulatory review.
In Q1 2020, Postmates made $107 million facilitating 115,000 merchants. It performed particularly well in the Southwest region of the United States.
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